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Kotak Mahindra Bank is an Indian private sector bank headquartered in Mumbai, India. It has 1369 branches and 2163 ATMs across 689 locations. Being the fourth largest bank in India by assets, Kotak Mahindra Bank provides a variety of financial services for corporate and retail customers.
Sovereign Gold Bonds were introduced by the Government of India in 2015 under the Gold Monetization Scheme. They are a great alternative to physical gold. They provide better security and higher returns for your investment. The bond issues are offered in tranches by the Reserve Bank of India in consultation with the Government of India.
About Kotak Mahindra Bank Gold Deposit Schemes
Kotak Mahindra Bank allows investors to purchase the Sovereign Gold Bond that is issued by the Government of India. Investors can either purchase it directly from the bank’s branch or through their Netbanking account.
These bonds are generally issued from October to March of every year. Currently, 2019-20 Series IX Bonds are on offer. They are available for subscription from February 03-07, 2020. The date of issuance is February 11th, 2020. Kotak Mahindra Bank customers can subscribe for the bonds at their nearest branch or through their Netbanking account.
Eligibility for Investment
The bond shall be issued in the form of a holding certificate or demat form, as the user chooses.
Date of Issue
The latest tranche of Series IX is available for subscription from February 03rd – February 07th, 2020. The Bond issue date is February 11th 2020
The Bonds shall be available in denominations of units of one gram of gold or multiples thereof.
Minimum investment in the Bonds shall be one gram with a maximum limit of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities, notified by the Government from time to time. This limit is for per fiscal year.
The subscription price of the bond shall be fixed by the Government based on the simple average of closing price of 999 purity gold, published by the India Bullion and Jewellers Association Limited, for the last 3 working days of the week preceding the subscription period.
The Bonds shall earn a nominal rate of interest of 2.50% p.a. Interest shall be paid in half-yearly interval and the last interest shall be payable along with principal on maturity.
Scheduled Commercial Banks (excluding RRBs, Small Finance Banks and Payment Banks), designated Post Offices (as may be notified), Stock Holding Corporation of India Ltd (SHCIL) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. are authorized to receive applications for the Bonds either directly or through agents.
Payment shall be accepted in Indian Rupees through cash, up to a maximum of ₹ 20,000/-, cheque, DD or by direct debit from your Kotak Mahindra Bank account.
The Bonds shall mature upon completion of 8 years from the date of issue of the Bonds. Pre-mature redemption of the Bond is permitted after fifth year of the date of issue of the Bonds and such repayments shall be made on the next interest payment date.
The redemption price shall be fixed based on simple average of closing price of 999 purity gold, published by the India Bullion and Jewellers Association Limited, for the last 3 working days of the week preceding the maturity date.
There will be no markdown on prevailing price of gold at the time of early redemption (post 5 years) or at maturity.
Loan against Bonds
The Bonds may be used as collateral for loans.
Interest on the Bonds shall be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Applying for the Bond
Kotak Mahindra Bank Customers may visit their nearest branch with KYC documents and submit the application form. They can also invest through their Netbanking account.
Transferability of the Bond
Available as per eligibility criteria of the receiver
Tradability of bonds
Yes, the bonds are tradable on stock exchanges
Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
Buying Sovereign Gold Bonds from Kotak Mahindra Bank has many advantages:
Investors can subscribe for the bonds at their nearest branch of Kotak Mahindra Bank. They are required to submit the KYC documentation. PAN number is mandatory while submitting the application.
Customers of the bank can also invest through their Netbanking account.
There are a number of advantages in investing in the Sovereign Gold Bond rather than physical gold.
You have to pay making charges ranging from 5 -20%
Banks charge 10-20% mark-up charges
No mark-up charges if withdrawn after minimum period of 5 years
Loss of making charges, value add charges & taxes
Banks do not take it back, so premium paid at time of purchase is written off
Hassle of storing them. Lockers and insurance charges to be incurred.
Nil, as they are given in document form or demat form
Need to pay Long term capital gains tax after 3 years, plus wealth tax
The interest earned on this bond is taxable at your income tax slab. There is no capital gains tax on the returns form this bond.
Based on market price of gold
Discounted price fixed by Government
1. Are there any risks in investing in SGBs?
There is an amount of risk involved with investing in SGBs. Investors may face the risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.
2.What are the Know-Your-Customer (KYC) norms?
The KYC norms requires you to submit your ID proof and address proof. The investor should also quote his/her ‘PAN Number’ issued by the Income Tax Department, on the application form.
3.Can each member of my family buy 4Kg in their own name?
Yes, each family member can buy the bonds in his/her own name if they satisfy the eligibility criteria. However, in case of joint purchase, the limit shall apply on the first applicant.
4.When will the customers be issued a Holding Certificate?
The customers will be issued Certificate of Holding on the date of issuance of the SGB. Certificate of Holding can be collected from the issuing banks/SHCIL offices/Post Offices/Designated stock exchanges/agents or obtained directly from RBI on email, if email address is provided in the application form.
5. What is the rate of interest and how will the interest be paid?
The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.
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